If all the shareholders including the controlling shareholders look at the price chart, they will notice that its share price has been falling from Rm 8.20 to currently Rm 4.85 in the last 12 months.
The 1st quarter report below shows that its earning per share (EPS) was 21.7 sen and its net tangible assets (NTA) was Rm 5.29 per share. Moreover, the company has more than Rm 100 million cash.
Since the company exports almost all its product to USA and in view of our Ringgit is about its historical low, the company will definitely make more and more profit in the next few quarters.
Why should the share be selling at single digit P/E ratio and below its NTA?
I would like the board of directors to consider my proposal to improve the share price to benefit all the shareholders especially the major controlling shareholders.
Every business man has the ambition to list his company in the stock market so that he can sell the shares he has created. Successful listing of the company is like Bank Negara has issued him a license to print money.
So, selling his shares is as important if not more important than selling his product. Of course, he must be wanting to sell his shares at higher prices. The usual way is for the company to make more profit which is the most powerful catalyst to move share price. If the company can make more and more profit, its share price will also continue to go up.
In the case of Latitude Tree, its share price seems to have reached its peak and has been dropping for one year, in spite of the fact that it has strong profit growth prospect and with about Rm 100 million cash in its account.
To break this price down trend I propose the following:
The company split its 1 share into 2 shares to create more shares to improve liquidity for trading.
After the share split, the company issue 1 bonus share for every 4 shares held by shareholders.
After the share split, the company issue 1 bonus convertible warrant for every 4 shares held by shareholders.
I am very sure its share price will go up if the company implements my proposal. All these corporate exercise are allowed by the Securities Commission which benefit all the shareholders without depleting the company’s cash. Giving out free warrants to shareholders is like giving them cash ang pau because they can sell the warrants in the open market.
Moreover, the controlling shareholder can increase his shareholdings by selling some of his shares to buy more warrants. For every 1 share he sells he can buy back 4 warrants.